# M/S SOUTH INDIAN BANK LTD. & ORS v. NAVEEN MATHEW PHILIP & ANR. ETC. ETC

- **Citation:** [2023] 4 S.C.R. 18
- **Court:** Supreme Court of India
- **Decided:** 2023-04-17
- **Case number:** Civil Appeal Nos. 2861-62 of 2023
- **Bench:** Sanjiv Khanna, M. M. Sundresh
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-south-indian-bank-ltd-ors-v-naveen-mathew-philip-anr-etc-etc-37034
- **Pages:** 23

## Headnote

Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002:
Writ Jurisdiction of High Court under - Matter pertaining to
default in payment of outstanding dues by the borrowers - Issuance
of notices u/s. 13(4) - Writ petitions by the borrowers challenging
the notices before the High Court - Debt Recovery tribunal was not
functional at the time when said writ petitions were filed- However,
became so from the month of March 2022 - Meanwhile, in an SLP,
order passed by this Court to transfer the pending matters to the
concerned tribunals when they start functioning with their respective
Presiding Officers duly in-charge - Notwithstanding the said order,
the High Court took upon itself to decide the said petitions and
allowed the borrower to make deferred payment in 12 months -
Appeal before this Court - Appellant's case that the relief granted
by the High Court may not be disturbed while pressing for reiteration
of law which might guide the High Court in not entertaining such
writ petitions in the future - Held: In view of the fair stand of the
appellant, the relief granted by the High Court not to be disturbed
- Powers conferred under Article 226 are rather wide but are
required to be exercised only in extraordinary circumstances - In
matters where the legislature has provided for a specific mechanism
for appropriate redressal, constitutional remedy not to be resorted
to - Constitution of India - Art. 226.
SARFAESI Act - Purpose and Object - Discussed.
Writ:
Writ of certiorari - Issuance of, when - Held: Is to be issued
over a decision when the Court finds that the process does not
conform to the law or statute - Writ is not to be issued to remedy all
violations - Writ court cannot substitute itself with the decision-
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making authority while finding fault with the process - When a
tribunal is constituted,it is expected to determine issues of fact and
law, including a statutory violation - Constitution of India - Art.
226.
Writ of mandamus - Issuance of - Writ petition before the
High Court in commercial matters against the private individual
seeking issuance of mandamus - Held: Writ of Mandamus is a
prerogative writ - In the absence of any legal right, the Court cannot
exercise the said power - More circumspection is required in a
financial transaction, particularly when one of the parties would
not come within the purview of Art. 12.
Judicial deprecation: Interference of the High Courts in
matters pertaining to the SARFAESI Act - Held: Said practice is
deprecated - Request to the High Courts not to entertain such cases
- When a statute prescribes a particular mode, an attempt to
circumvent shall not be encouraged by a writ court - A litigant
cannot avoid the non-compliance of approaching the tribunal which
requires the prescription of fees and use the constitutional remedy
as an alternative - Constitution of India - Article 226.
Judicial notice: Commercial matters, where an effective and
efficacious alternative forum has been constituted through a statute
- Interference by certain High Court invoking Art. 226 in such
matters leading to a regular supply of cases before this Court -
Judicial notice taken by this Court.
Hari Vishnu Kamath v. Syed Ahmad Ishaque (1955) 1
SCR 1104; Mardia Chemicals Ltd. v. Union of India,
(2004) 4 SCC 311 : [2004] 3 SCR 982- relied on.
Radha Krishan Industries v. State of H.P. (2021) 6 SCC
771; Phoenix Arc Private Limited vs. Vishwa Bharati
Vidya Mandir & Ors. (2022) 5 SCC 345; Federal Bank
Ltd. vs. Sagar Thomas & Ors. (2003) 10 SCC 733 :
[2003] 4 Suppl. SCR 121; State Bank of India vs.
Arvindra Electronics (P) Ltd. 2022 SCC Online SC
1522; United Bank of India vs. Satywati Tondon &
Others (2010) 8 SCC 110 : [2010] 9 SCR 1; Authorized
Officer, State Bank of Travancore & Another vs.
M/S SOUTH INDIAN BANK LTD. & ORS. v. NAVEEN
MATHEW PHILIP & ANR. ETC. ETC.
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SUPREME COURT REPORTS
[2023] 4 S.C.R.
Mathew K.C. (2018) 3 SCC 85 :

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SUPREME COURT REPORTS
[2023] 4 S.C.R.
[2023] 4 S.C.R. 18
18
M/S SOUTH INDIAN BANK LTD. & ORS.
v.
NAVEEN MATHEW PHILIP & ANR. ETC. ETC.
(Civil Appeal Nos. 2861-62 of 2023)
APRIL 17, 2023
[SANJIV KHANNA AND M. M. SUNDRESH, JJ.]
Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002:
Writ Jurisdiction of High Court under - Matter pertaining to
default in payment of outstanding dues by the borrowers - Issuance
of notices u/s. 13(4) - Writ petitions by the borrowers challenging
the notices before the High Court - Debt Recovery tribunal was not
functional at the time when said writ petitions were filed- However,
became so from the month of March 2022 - Meanwhile, in an SLP,
order passed by this Court to transfer the pending matters to the
concerned tribunals when they start functioning with their respective
Presiding Officers duly in-charge - Notwithstanding the said order,
the High Court took upon itself to decide the said petitions and
allowed the borrower to make deferred payment in 12 months -
Appeal before this Court - Appellant's case that the relief granted
by the High Court may not be disturbed while pressing for reiteration
of law which might guide the High Court in not entertaining such
writ petitions in the future - Held: In view of the fair stand of the
appellant, the relief granted by the High Court not to be disturbed
- Powers conferred under Article 226 are rather wide but are
required to be exercised only in extraordinary circumstances - In
matters where the legislature has provided for a specific mechanism
for appropriate redressal, constitutional remedy not to be resorted
to - Constitution of India - Art. 226.
SARFAESI Act - Purpose and Object - Discussed.
Writ:
Writ of certiorari - Issuance of, when - Held: Is to be issued
over a decision when the Court finds that the process does not
conform to the law or statute - Writ is not to be issued to remedy all
violations - Writ court cannot substitute itself with the decision-
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making authority while finding fault with the process - When a
tribunal is constituted,it is expected to determine issues of fact and
law, including a statutory violation - Constitution of India - Art.
226.
Writ of mandamus - Issuance of - Writ petition before the
High Court in commercial matters against the private individual
seeking issuance of mandamus - Held: Writ of Mandamus is a
prerogative writ - In the absence of any legal right, the Court cannot
exercise the said power - More circumspection is required in a
financial transaction, particularly when one of the parties would
not come within the purview of Art. 12.
Judicial deprecation: Interference of the High Courts in
matters pertaining to the SARFAESI Act - Held: Said practice is
deprecated - Request to the High Courts not to entertain such cases
- When a statute prescribes a particular mode, an attempt to
circumvent shall not be encouraged by a writ court - A litigant
cannot avoid the non-compliance of approaching the tribunal which
requires the prescription of fees and use the constitutional remedy
as an alternative - Constitution of India - Article 226.
Judicial notice: Commercial matters, where an effective and
efficacious alternative forum has been constituted through a statute
- Interference by certain High Court invoking Art. 226 in such
matters leading to a regular supply of cases before this Court -
Judicial notice taken by this Court.
Hari Vishnu Kamath v. Syed Ahmad Ishaque (1955) 1
SCR 1104; Mardia Chemicals Ltd. v. Union of India,
(2004) 4 SCC 311 : [2004] 3 SCR 982- relied on.
Radha Krishan Industries v. State of H.P. (2021) 6 SCC
771; Phoenix Arc Private Limited vs. Vishwa Bharati
Vidya Mandir & Ors. (2022) 5 SCC 345; Federal Bank
Ltd. vs. Sagar Thomas & Ors. (2003) 10 SCC 733 :
[2003] 4 Suppl. SCR 121; State Bank of India vs.
Arvindra Electronics (P) Ltd. 2022 SCC Online SC
1522; United Bank of India vs. Satywati Tondon &
Others (2010) 8 SCC 110 : [2010] 9 SCR 1; Authorized
Officer, State Bank of Travancore & Another vs.
M/S SOUTH INDIAN BANK LTD. & ORS. v. NAVEEN
MATHEW PHILIP & ANR. ETC. ETC.
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SUPREME COURT REPORTS
[2023] 4 S.C.R.
Mathew K.C. (2018) 3 SCC 85 : [2018] 1 SCR 233;
Varimadugu OBI Reddy vs. B. Sreenivasulu & Others
(2023) 2 SCC 168 - referred to.
Case Law Reference
(2022) 5 SCC 345
referred to
Para 11, 17
[2003] 4 Suppl. SCR 121
referred to
Para 11, 17
[2010] 9 SCR 1
referred to
Para 11, 17
[2018] 1 SCR 233
referred to
Para 11, 17
(2023) 2 SCC 168
referred to
Para 11, 17
[1955] 1 SCR 1104
relied on
Para 14
[2004] 3 SCR 982
relied on
Para 15
(2021) 6 SCC 771
referred to
Para 16
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 28612862 of 2023.
From the Judgment and Order dated 19.10.2022 of the High Court
of Kerala at Ernakulam in WA Nos. 1492 and 1497 of 2022.
K. V. Vishwanathan, Sr. Adv., A. Karthik, Arsh Khan, Ms. Smrithi
Suresh, Ms. Sreepriya K, Advs. for the Appellants.
Shyam Divan, Sr. Adv., Nishe Rajen Shonker, Mrs. Anu K Joy,
Abraham C. Mathew, Alim Anvar, Advs. for the Respondents.
The Judgment of the Court was delivered by
M. M. SUNDRESH, J.
1. Leave granted.
2. Seeking enforcement of a unilateral offer concerning private
financial transactions, while questioning the steps taken to recover the
dues on the failure to comply with the one-time settlements, extraordinary
jurisdiction of the High Court was sought to be invoked. Acceding to the
request made by duly interfering with the action taken by the Appellants,
orders were passed, in exercise of the powers conferred under Article
226 of the Constitution of India by the High Court of Kerala, which are
impugned in the present appeals.
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3. Heard Mr. K.V. Vishwanathan, learned Senior Counsel for the
Appellants and Mr. Shyam Divan, learned Senior Counsel for the
Respondents.
4. Two loans were obtained by the Respondents, being a housing
/ KCC overdraft loan and a business loan. The accounts of the
Respondents were declared as non-performing assets ("NPA") on
27.05.2021. Notices under Section 13(2) of the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 (hereinafter referred to as "SARFAESI Act") were issued on
07.08.2021 and 12.08.2021, respectively, which were duly replied to by
the Respondents on 28.10.2021, seeking twelve months' time to repay
the loan.
5. Strangely enough, within 3 days of the reply dated 28.10.2021,
prior to the expiry of the statutory period prescribed, a challenge was
laid to the demand notice issued under Section 13(2) of the SARFAESI
Act, by filing Writ Petition No. 23940 of 2021. Entertaining the said lis,
a direction was issued to the Appellants to consider the proposal placed.
In due compliance of the aforesaid order, the Respondents were allowed
to remit the dues accrued in five installments instead of twelve. The
extended benefit conferred was not utilized by the Respondents, and
therefore, a reminder was also sent. Receiving no response, two notices
under Section 13(4) of the SARFAESI Act, were issued on 02.12.2021
and 20.12.2021.
6. Impugning the aforesaid notices, two writ petitions were filed
by the Respondents, being Writ Petition No. 30238 of 2021 and 30450 of
2021 questioning the action taken, through a writ of certiorari while
praying for a positive direction to accept the unilateral offers made. It is
to be noted that the Debt Recovery Tribunal, though was not functional
at the time of filing the aforesaid Writ Petitions, became so from the
month of March, 2022.
7. Taking note of the then prevailing situation resulting in the post
of Presiding Officer lying vacant for proper adjudication in various
Tribunals, an order was passed by this Court in Special Leave Petition
No. 10911 dated 16.12.2021,
"Learned Senior Counsel appearing for the petitioner has
brought to our notice the difficulty being faced by parties on
account of non-appointment of members in DRTs and DRATs.
M/S SOUTH INDIAN BANK LTD. & ORS. v. NAVEEN
MATHEW PHILIP & ANR. ETC. ETC. [M. M. SUNDRESH, J.]
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He requested that the matters before DRT and DRAT can be
directed to be considered by other Tribunals like Central
Administrative Tribunal, Armed Forces Tribunal and Industrial
Tribunal within the State.
With a view to resolve the problem being faced by the parties,
for the time being and purely as a stop-gap arrangement, we
request the concerned High Court(s) to entertain the matters falling
within the jurisdiction of DRTs and DRATs under Article 226 of
the Constitution of India, till further orders.
We make it clear that once the Tribunal(s) is/are constituted,
the matters can be relegated to the Tribunals by the High Court(s).
List the matter on 21-1-2022."
8. As could be seen, the order is self-explanatory, making it clear
that it is only an interim arrangement, and therefore, the pending matters
ought to be transferred to the concerned Tribunals when they start
functioning with their respective Presiding Officers duly in-charge. The
aforesaid matter was disposed of by the order dated 12.09.2022,
"1. Counsel appearing on behalf of the petitioner states that since
the post in the Debt Recovery Tribunal has been filled up, the
cause does not survive.
2. The Special Leave Petition is accordingly disposed of without
this Court expressing any opinion on the question of law raised.
3. Pending applications, if any, stands disposed of."
9. Notwithstanding the orders passed above by this Court, the
High Court took upon itself to decide the issues raised, on merit, by
allowing the Respondents to make deferred payment in 20 installments,
a relief which was more than the one prayed for. The installments were
modified by the learned Division Bench in Writ Appeal No. 1492 of 2022
and 1497 of 2022, to 12 months as originally prayed for by the Respondents
while declining to interfere with the decision of the learned Single Judge
on merit. Impugning the aforesaid orders, the lender bank has filed the
present appeals.
10. The learned Senior Counsel appearing for the Appellants fairly
submitted that the relief granted by the High Court may not be disturbed
while pressing for the reiteration of law which might guide the High
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Court in not entertaining such writ petitions in the future. It is further
submitted that the High Court has exercised writ jurisdiction under Article
226 of the Constitution of India, even after the Debt Recovery Tribunal
became functional, in about 185 cases pertaining to the Appellants alone.
After the filing of the Special Leave Petitions, 35 Writ Petitions have
been filed. Resultantly, the Appellants are not in a position to proceed
further to recover the amounts due from the defaulting borrowers/
guarantors, defeating the object of the SARFAESI Act itself.
11. Learned Senior Counsel brought to the notice of this Court
that a writ petition involving private individuals over a financial transaction
is not maintainable. Despite the position being settled, the interference
by various High Courts continues. The very objective of the Act 54 of
2002 is being frustrated by such interference. The alternative remedy
being effective and efficacious, the extraordinary jurisdiction of the High
Court under Article 226 of the Constitution of India, either be a writ of
certiorari or mandamus, ought not to have been invoked. One has to
see the impact on the Appellants of the repeated interference by the
High Court. The learned Senior Counsel took us through the following
decisions:
•
Phoenix Arc Private Limited vs.Vishwa Bharati Vidya
Mandir & Ors., (2022) 5 SCC 345.
•
Federal Bank Ltd. vs. Sagar Thomas & Ors., (2003) 10
SCC 733.
•
State Bank of India vs. Arvindra Electronics (P) Ltd., 2022
SCC Online SC 1522.
•
United Bank of India vs. Satywati Tondon & Others, (2010)
8 SCC 110
•
Authorized Officer, State Bank of Travancore & Another
vs. Mathew K.C., (2018) 3 SCC 85
•
Varimadugu OBI Reddy vs. B. Sreenivasulu & Others,
(2023) 2 SCC 168.
12. The learned Senior Counsel appearing for the Respondents
submitted that at the time of filing the Writ Petitions, the Tribunal was
not functioning. The power available under Article 226 of the Constitution
of India cannot be taken away, notwithstanding the existence of the
M/S SOUTH INDIAN BANK LTD. & ORS. v. NAVEEN
MATHEW PHILIP & ANR. ETC. ETC. [M. M. SUNDRESH, J.]
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Tribunal. While appreciating the stand taken by the Appellants, it is
submitted that when extreme steps are taken, a litigant may not have
any other option except to approach the writ court.
13. In view of the fair stand taken by the learned Senior Counsel
appearing for the Appellants, we do not wish to interfere with the
impugned orders passed. We may, however, reiterate the settled position
of law on the interference of the High Court invoking Article 226 of the
Constitution of India in commercial matters, where an effective and
efficacious alternative forum has been constituted through a statute. We
are also constrained to take judicial notice of the fact that certain High
Courts continue to interfere in such matters, leading to a regular supply
of cases before this Court. One such High Court is that of Punjab &
Haryana.
14. A writ of certiorari is to be issued over a decision when the
Court finds that the process does not conform to the law or statute. In
other words, courts are not expected to substitute themselves with the
decision-making authority while finding fault with the process along with
the reasons assigned. Such a writ is not expected to be issued to remedy
all violations. When a Tribunal is constituted, it is expected to go into the
issues of fact and law, including a statutory violation. A question as to
whether such a violation would be over a mandatory prescription as
against a discretionary one is primarily within the domain of the Tribunal.
So also, the issue governing waiver, acquiescence, and estoppel. We
wish to place reliance on the decision of this Court in Hari Vishnu
Kamath v. Syed Ahmad Ishaque, (1955) 1 SCR 1104,
"Then the question is whether there are proper grounds for
the issue of certiorari in the present case. There was considerable
argument before us as to the character and scope of the writ of
certiorari and the conditions under which it could be issued. The
question has been considered by this Court in Parry & Co. v.
Commercial Employees' Association, Madras [(1952) SCR
519], Veerappa Pillai v. Raman and Raman Ltd. & Others
[(1952) SCR 583], Ibrahim Aboobaker v. Custodian General
[(1952) SCR 696] and quite recently in T.C. Basappa v. T.
Nagappa [(1955) SCR 250]. On these authorities, the following
propositions may be taken as established: (1) Certiorari will be
issued for correcting errors of jurisdiction, as when an inferior
Court or Tribunal acts without jurisdiction or in excess of it, or
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fails to exercise it. (2) Certiorari will also be issued when the
Court or Tribunal acts illegally in the exercise of its undoubted
jurisdiction, as when it decides without giving an opportunity to
the parties to be heard, or violates the principles of natural justice.
(3) The Court issuing a writ of certiorari acts in exercise of a
supervisory and not appellate jurisdiction. One consequence of
this is that the Court will not review findings of fact reached by
the inferior Court or Tribunal, even if they be erroneous. This is
on the principle that a Court which has jurisdiction over a subjectmatter has jurisdiction to decide wrong as well as right, and when
the Legislature does not choose to confer a right of appeal against
that decision, it would be defeating its purpose and policy, if a
superior Court were to re-hear the case on the evidence, and
substitute its own findings in certiorari. These propositions are
well-settled and are not in dispute.
(4) The further question on which there has been some controversy
is whether a writ can be issued, when the decision of the inferior
Court or Tribunal is erroneous in law. This question came up for
consideration in Rex v. Northumberland Compensation Appeal
Tribunal; Ex parte Shaw [(1951) 1 K.B. 711], and it was held
that when a Tribunal made a "speaking order" and the reasons
given in that order in support of the decision were bad in law,
certiorari could be granted. It was pointed out by Lord Goddard,
C.J. that that had always been understood to be the true scope of
the power. Walsall Overseers v. London and North Western Ry.
Co. [(1879) 4 A.C. 30] and Rex v. Nat Bell Liquors Ld. [(1922)
2 A.C. 28] were quoted in support of this view. In Walsall
Overseers v. London and North Western Ry. Co. [(1879) 4 A.C.
30] Lord Cairns, L.C. observed as follows:
"If there was upon the face of the order of the court of
quarter sessions anything which showed that order was
erroneous, the Court of Queen's Bench might be asked to have
the order brought into it, and to look at the order, and view it
upon the face of it, and if the court found error upon the face
of it, to put an end to its existence by quashing it."
In Rex v. Nat Bell Liquors Ld. [(1922) 2 A.C. 128] Lord
Sumner said:
M/S SOUTH INDIAN BANK LTD. & ORS. v. NAVEEN
MATHEW PHILIP & ANR. ETC. ETC. [M. M. SUNDRESH, J.]
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"That supervision goes to two points; one is the area of the
inferior jurisdiction and the qualifications and conditions of its
exercise; the other is the observance of the law in the course
of its exercise."
The decision in Rex v. Northumberland Compensation
Appeal Tribunal; Ex parte Shaw [(1951) 1 K.B. 711] was taken
in appeal, and was affirmed by the Court of Appeal in Rex v.
Northumberland Compensation Appeal Tribunal; Ex parte
Shaw [(1952) 1 K.B. 338]. In laying down that an error of law
was a ground for granting certiorari, the learned Judges
emphasised that it must be apparent on the face of the record.
Denning, L.J. who stated the power in broad and general terms
observed:
"It will have been seen that throughout all the cases there
is one governing rule: certiorari is only available to quash a
decision for error of law if the error appears on the face of
the record."
The position was thus summed up by Morris, L.J.
"It is plain that certiorari will not issue as the cloak of an
appeal in disguise. It does not lie in order to bring an order or
decision for rehearing of the issue raised in the proceedings. It
exists to correct error of law where revealed on the face of
an order or decision, or irregularity, or absence of, or excess
of, jurisdiction where shown".
In Veerappa Pillai v. Raman & Raman Ltd. [(1952) SCR 583],
it was observed by this Court that under article 226 the writ should
be issued "in grave cases where the subordinate tribunals or bodies
or officers act wholly without jurisdiction, or in excess of it, or in
violation of the principles of natural justice, or refuse to exercise a
jurisdiction vested in them, or there is an error apparent on the
face of the record". In T.C. Basappa v. T. Nagappa [(1955)
SCR 250] the law was thus stated:
"An error in the decision or determination itself may also
be amenable to a writ of 'certiorari' but it must be a manifest
error apparent on the face of the proceedings, e.g., when it
is based on clear ignorance or disregard of the provisions of
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law. In other words, it is a patent error which can be corrected
by 'certiorari' but not a mere wrong decision."
15. The object and reasons behind the Act 54 of 2002 are very
clear as observed by this Court in Mardia Chemicals Ltd. v. Union of
India, (2004) 4 SCC 311. While it facilitates a faster and smoother
mode of recovery sans any interference from the Court, it does provide
a fair mechanism in the form of the Tribunal being manned by a legally
trained mind. The Tribunal is clothed with a wide range of powers to set
aside an illegal order, and thereafter, grant consequential reliefs, including
re-possession and payment of compensation and costs. Section 17(1) of
the SARFAESI Act gives an expansive meaning to the expression "any
person", who could approach the Tribunal.
16. Approaching the High Court for the consideration of an offer
by the borrower is also frowned upon by this Court. A writ of mandamus
is a prerogative writ. In the absence of any legal right, the Court cannot
exercise the said power. More circumspection is required in a financial
transaction, particularly when one of the parties would not come within
the purview of Article 12 of the Constitution of India. When a statute
prescribes a particular mode, an attempt to circumvent shall not be
encouraged by a writ court. A litigant cannot avoid the non-compliance
of approaching the Tribunal which requires the prescription of fees and
use the constitutional remedy as an alternative. We wish to quote with
profit a recent decision of this Court in Radha Krishan Industries v.
State of H.P., (2021) 6 SCC 771,
"25. In this background, it becomes necessary for this Court, to
dwell on the "rule of alternate remedy" and its judicial exposition.
In Whirlpool Corpn. v. Registrar of Trade Marks (1998) 8 SCC
1, a two-Judge Bench of this Court after reviewing the case law
on this point, noted: (SCC pp. 9-10, paras 14-15)
"14. The power to issue prerogative writs under Article 226
of the Constitution is plenary in nature and is not limited by any
other provision of the Constitution. This power can be exercised
by the High Court not only for issuing writs in the nature of
habeas corpus, mandamus, prohibition, quo warranto and
certiorari for the enforcement of any of the Fundamental Rights
contained in Part III of the Constitution but also for "any other
purpose".
M/S SOUTH INDIAN BANK LTD. & ORS. v. NAVEEN
MATHEW PHILIP & ANR. ETC. ETC. [M. M. SUNDRESH, J.]
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15. Under Article 226 of the Constitution, the High Court, having
regard to the facts of the case, has a discretion to entertain or
not to entertain a writ petition. But the High Court has imposed
upon itself certain restrictions one of which is that if an effective
and efficacious remedy is available, the High Court would not
normally exercise its jurisdiction. But the alternative remedy
has been consistently held by this Court not to operate as
a bar in at least three contingencies, namely, where the
writ petition has been filed for the enforcement of any of
the Fundamental Rights or where there has been a violation
of the principle of natural justice or where the order or
proceedings are wholly without jurisdiction or the vires of
an Act is challenged. There is a plethora of case-law on this
point but to cut down this circle of forensic whirlpool, we would
rely on some old decisions of the evolutionary era of the
constitutional law as they still hold the field".
(emphasis supplied)
26. Following the dictum of this Court in Whirlpool Corpn. v.
Registrar of Trade Marks [(1998) 8 SCC 1], in Harbanslal
Sahnia v. Indian Oil Corpn. Ltd. [(2003) 2 SCC 107], this Court
noted that: (Harbanslal Sahniacase, SCC p. 110, para 7)
"7. So far as the view taken by the High Court that the remedy
by way of recourse to arbitration clause was available to the
appellants and therefore the writ petition filed by the appellants
was liable to be dismissed is concerned, suffice it to observe
that the rule of exclusion of writ jurisdiction by availability of
an alternative remedy is a rule of discretion and not one of
compulsion. In an appropriate case, in spite of availability
of the alternative remedy, the High Court may still exercise
its writ jurisdiction in at least three contingencies: (i) where
the writ petition seeks enforcement of any of the
fundamental rights; (ii) where there is failure of principles
of natural justice; or (iii) where the orders or proceedings
are wholly without jurisdiction or the vires of an Act is
challenged. (See Whirlpool Corpn.v. Registrar of Trade
Marks[(1998) 8 SCC 1].) The present case attracts applicability
of the first two contingencies. Moreover, as noted, the
appellants' dealership, which is their bread and butter, came to
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be terminated for an irrelevant and non-existent cause. In such
circumstances, we feel that the appellants should have been
allowed relief by the High Court itself instead of driving them
to the need of initiating arbitration proceedings."
(emphasis supplied)
27. The principles of law which emerge are that:
27.1. The power under Article 226 of the Constitution to issue
writs can be exercised not only for the enforcement of fundamental
rights, but for any other purpose as well.
27.2. The High Court has the discretion not to entertain a writ
petition. One of the restrictions placed on the power of the High
Court is where an effective alternate remedy is available to the
aggrieved person.
27.3. Exceptions to the rule of alternate remedy arise where:
(a) the writ petition has been filed for the enforcement of a
fundamental right protected by Part III of the Constitution; (b)
there has been a violation of the principles of natural justice; (c)
the order or proceedings are wholly without jurisdiction; or (d)
the vires of a legislation is challenged.
27.4. An alternate remedy by itself does not divest the High
Court of its powers under Article 226 of the Constitution in an
appropriate case though ordinarily, a writ petition should not be
entertained when an efficacious alternate remedy is provided by
law.
27.5. When a right is created by a statute, which itself
prescribes the remedy or procedure for enforcing the right or
liability, resort must be had to that particular statutory remedy
before invoking the discretionary remedy under Article 226 of the
Constitution. This rule of exhaustion of statutory remedies is a
rule of policy, convenience and discretion.
27.6. In cases where there are disputed questions of fact, the
High Court may decide to decline jurisdiction in a writ petition.
However, if the High Court is objectively of the view that the
nature of the controversy requires the exercise of its writ
jurisdiction, such a view would not readily be interfered with."
M/S SOUTH INDIAN BANK LTD. & ORS. v. NAVEEN
MATHEW PHILIP & ANR. ETC. ETC. [M. M. SUNDRESH, J.]
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17. We shall reiterate the position of law regarding the interference
of the High Courts in matters pertaining to the SARFAESI Act by quoting
a few of the earlier decisions of this Court wherein the said practice has
been deprecated while requesting the High Courts not to entertain such
cases.
•
Federal Bank Ltd. v. Sagar Thomas, (2003) 10 SCC733,
"18. From the decisions referred to above, the position
that emerges is that a writ petition under Article 226 of the
Constitution of India may be maintainable against (i) the
State (Government); (ii) an authority; (iii) a statutory body;
(iv) an instrumentality or agency of the State; (v) a company
which is financed and owned by the State; (vi) a private
body run substantially on State funding; (vii) a private body
discharging public duty or positive obligation of public nature;
and (viii) a person or a body under liability to discharge any
function under any statute, to compel it to perform such a
statutory function.
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26.A company registered under the Companies Act for
the purposes of carrying on any trade or business is a private
enterprise to earn livelihood and to make profits out of such
activities. Banking is also a kind of profession and a
commercial activity, the primary motive behind it can well
be said to earn returns and profits. Since time immemorial,
such activities have been carried on by individuals generally.
It is a private affair of the company though the case of
nationalized banks stands on a different footing. There may
well be companies, in which majority of the share capital
may be contributed out of the State funds and in that view
of the matter there may be more participation or dominant
participation of the State in managing the affairs of the
company. But in the present case we are concerned with a
banking company which has its own resources to raise its
funds without any contribution or shareholding by the State.
It has its own Board of Directors elected by its shareholders.
It works like any other private company in the banking
business having no monopoly status at all. Any company
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carrying on banking business with a capital of five lakhs
will become a scheduled bank. All the same, banking activity
as a whole carried on by various banks undoubtedly has an
impact and effect on the economy of the country in general.
Money of the shareholders and the depositors is with such
companies, carrying on banking activity. The banks finance
the borrowers on any given rate of interest at a particular
time. They advance loans as against securities. Therefore,
it is obviously necessary to have regulatory check over such
activities in the interest of the company itself, the
shareholders, the depositors as well as to maintain the proper
financial equilibrium of the national economy. The banking
companies have not been set up for the purposes of building
the economy of the State; on the other hand such private
companies have been voluntarily established for their own
purposes and interest but their activities are kept under
check so that their activities may not go wayward and harm
the economy in general. A private banking company with
all freedom that it has, has to act in a manner that it may
not be in conflict with or against the fiscal policies of the
State and for such purposes, guidelines are provided by
Reserve Bank so that a proper fiscal discipline, to conduct
its affairs in carrying on its business, is maintained. So as to
ensure adherence to such fiscal discipline, if need be, at
times even the management of the company can be taken
over. Nonetheless, as observed earlier, these are all
regulatory measures to keep a check and provide guidelines
and not a participatory dominance or control over the affairs
of the company. For other companies in general carrying
on other business activities, maybe manufacturing, other
industries or any business, such checks are provided under
the provisions of the Companies Act, as indicated earlier.
There also, the main consideration is that the company itself
may not sink because of its own mismanagement or the
interest of the shareholders or people generally may not be
jeopardized for that reason. Besides taking care of such
interest as indicated above, there is no other interest of the
State, to control the affairs and management of the private
companies. Care is taken in regard to the industries covered
M/S SOUTH INDIAN BANK LTD. & ORS. v. NAVEEN
MATHEW PHILIP & ANR. ETC. ETC. [M. M. SUNDRESH, J.]
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under the Industries (Development and Regulation) Act,
1951 that their production, which is important for the
economy, may not go down, yet the business activity is
carried on by such companies or corporations which only
remains a private activity of the entrepreneurs/companies.
27. Such private companies would normally not be
amenable to the writ jurisdiction under Article 226 of the
Constitution. But in certain circumstances a writ may issue
to such private bodies or persons as there may be statutes
which need to be complied with by all concerned including
the private companies. For example, there are certain
legislations like the Industrial Disputes Act, the Minimum
Wages Act, the Factories Act or for maintaining proper
environment, say the Air (Prevention and Control of
Pollution) Act, 1981 or the Water (Prevention and Control
of Pollution) Act, 1974 etc. or statutes of the like nature
which fasten certain duties and responsibilities statutorily
upon such private bodies which they are bound to comply
with. If they violate such a statutory provision a writ would
certainly be issued for compliance with those provisions.
For instance, if a private employer dispenses with the service
of its employee in violation of the provisions contained under
the Industrial Disputes Act, in innumerable cases the High
Court interfered and has issued the writ to the private bodies
and the companies in that regard. But the difficulty in issuing
a writ may arise where there may not be any noncompliance with or violation of any statutory provision by
the private body. In that event a writ may not be issued at
all. Other remedies, as may be available, may have to be
resorted to."
•
United Bank of India v. Satyawati Tondon, (2010) 8
SCC 110,
"42.There is another reason why the impugned order
should be set aside. If Respondent 1 had any tangible
grievance against the notice issued under Section 13(4) or
action taken under Section 14, then she could have availed
remedy by filing an application under Section 17(1). The
expression "any person" used in Section 17(1) is of wide
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import. It takes within its fold, not only the borrower but
also the guarantor or any other person who may be affected
by the action taken under Section 13(4) or Section 14. Both,
the Tribunal and the Appellate Tribunal are empowered to
pass interim orders under Sections 17 and 18 and are
required to decide the matters within a fixed time schedule.
It is thus evident that the remedies available to an aggrieved
person under the SARFAESI Act are both expeditious and
effective.
43. Unfortunately, the High Court overlooked the settled
law that the High Court will ordinarily not entertain a petition
under Article 226 of the Constitution if an effective remedy
is available to the aggrieved person and that this rule applies
with greater rigour in matters involving recovery of taxes,
cess, fees, other types of public money and the dues of
banks and other financial institutions. In our view, while
dealing with the petitions involving challenge to the action
taken for recovery of the public dues, etc. the High Court
must keep in mind that the legislations enacted by
Parliament and State Legislatures for recovery of such dues
are a code unto themselves inasmuch as they not only
contain comprehensive procedure for recovery of the dues
but also envisage constitution of quasi-judicial bodies for
redressal of the grievance of any aggrieved person.
Therefore, in all such cases, the High Court must insist that
before availing remedy under Article 226 of the Constitution,
a person must exhaust the remedies available under the
relevant statute.
44. While expressing the aforesaid view, we are
conscious that the powers conferred upon the High Court
under Article 226 of the Constitution to issue to any person
or authority, including in appropriate cases, any Government,
directions, orders or writs including the five prerogative writs
for the enforcement of any of the rights conferred by Part
III or for any other purpose are very wide and there is no
express limitation on exercise of that power but, at the same
time, we cannot be oblivious of the rules of self-imposed
restraint evolved by this Court, which every High Court is
M/S SOUTH INDIAN BANK LTD. & ORS. v. NAVEEN
MATHEW PHILIP & ANR. ETC. ETC. [M. M. SUNDRESH, J.]
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bound to keep in view while exercising power under Article
226 of the Constitution.
45. It is true that the rule of exhaustion of alternative
remedy is a rule of discretion and not one of compulsion,
but it is difficult to fathom any reason why the High Court
should entertain a petition filed under Article 226 of the
Constitution and pass interim order ignoring the fact that
the petitioner can avail effective alternative remedy by filing
application, appeal, revision, etc. and the particular legislation
contains a detailed mechanism for redressal of his grievance.
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55. It is a matter of serious concern that despite repeated
pronouncement of this Court, the High Courts continue to
ignore the availability of statutory remedies under the DRT
Act and the SARFAESI Act and exercise jurisdiction under
Article 226 for passing orders which have serious adverse
impact on the right of banks and other financial institutions
to recover their dues. We hope and trust that in future the
High Courts will exercise their discretion in such matters
with greater caution, care and circumspection."
•
State Bank of Travancore v. Mathew K.C., (2018) 3
SCC 85,
"5. We have considered the submissions on behalf of
the parties. Normally this Court in exercise of jurisdiction
under Article 136 of the Constitution is loath to interfere
with an interim order passed in a pending proceeding before
the High Court, except in special circumstances, to prevent
manifest injustice or abuse of the process of the court. In
the present case, the facts are not in dispute. The
discretionary jurisdiction under Article 226 is not absolute
but has to be exercised judiciously in the given facts of a
case and in accordance with law. The normal rule is that a
writ petition under Article 226 of the Constitution ought not
to be entertained if alternate statutory remedies are
available, except in cases falling within the well-defined
exceptions as observed in CIT v. Chhabil Dass Agarwal
[(2014) 1 SCC 603], as follows: (SCC p. 611, para 15)
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"15. Thus, while it can be said that this Court has
recognised some exceptions to the rule of alternative
remedy i.e. where the statutory authority has not acted
in accordance with the provisions of the enactment in
question, or in defiance of the fundamental principles of
judicial procedure, or has resorted to invoke the provisions
which are repealed, or when an order has been passed
in total violation of the principles of natural justice, the
proposition laid down in Thansingh Nathmal v. Supt.
of Taxes [AIR 1964 SC 1419], Titaghur Paper Mills
Co. Ltd. v. State of Orissa [(1983) 2 SCC 433: 1983
SCC (Tax) 131] and other similar judgments that the
High Court will not entertain a petition under Article 226
of the Constitution if an effective alternative remedy is
available to the aggrieved person or the statute under
which the action complained of has been taken itself
contains a mechanism for redressal of grievance still
holds the field. Therefore, when a statutory forum is
created by law for redressal of grievances, a writ petition
should not be entertained ignoring the statutory
dispensation."
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8. The Statement of Objects and Reasons of
the SARFAESI Act states that the banking and financial
sector in the country was felt not to have a level playing
field in comparison to other participants in the financial
markets in the world. The financial institutions in India did
not have the power to take possession of securities and sell
them. The existing legal framework relating to commercial
transactions had not kept pace with changing commercial
practices and financial sector reforms resulting in tardy
recovery of defaulting loans and mounting non-performing
assets of banks and financial institutions. Narasimhan
Committee I and II as also the Andhyarujina Committee
constituted by the Central Government Act had suggested
enactment of new legislation for securitisation and
empowering banks and financial institutions to take
possession of securities and sell them without court
M/S SOUTH INDIAN BANK LTD. & ORS. v. NAVEEN
MATHEW PHILIP & ANR. ETC. ETC. [M. M. SUNDRESH, J.]
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intervention which would enable them to realise long-term
assets, manage problems of liquidity, asset liability
mismatches and improve recovery. The proceedings under
the Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 (hereinafter referred to as "the DRT
Act") with passage of time, had become synonymous with
those before regular courts affecting expeditious
adjudication.